Record Fuel Costs Push Petrol Prices Up

Soaring refined (ready-to-go) petrol costs and the weak NZ
dollar have forced BP to lift its petrol and diesel prices
by three cents a litre at its company-owned service stations
with immediate effect.

BP’s Managing Director Peter
Griffiths said since July 3 when BP last lifted its prices,
the cost of refined petrol has risen by around NZ$7.50 a
barrel - the equivalent of around 5 cents a litre - to a
record high of NZ$83.19.

As BP buys its fuel in US
dollars, our weak exchange rate also means BP is now paying
about NZ$10 a barrel (or 7 cents a litre) more than it did
in January this year.

The increase takes prices at most BP
company-owned service stations in the main centres to
$1.14.9 (Unleaded 91) and $1.19.9 (Premium Unleaded) and
diesel to 77.5 cents.

BP buys about half its petrol
as ready-made fuel from overseas refineries. Marsden Point
Refinery in Whangarei does not have the capacity to
manufacture all of New Zealand’s petrol needs.

Although
crude oil had dropped by around NZ$5 a barrel (or 3.5 cents
per litre) since early July, in the past week, crude oil
prices have risen again - by around NZ$2 a
barrel.

“The refined market is driven by
supply and demand. At the moment, demand is up due largely
to the buoyant United States’ economy and also high demand
in Asia. The end result is that fuel buyers are having to
pay a lot more than they did a month ago.”

Mr Griffiths
said the pressure has been on BP to lift its prices for the
past three weeks, but he resisted in the hope that refined
costs would start to drop to match earlier falls in crude
costs.

“Unfortunately, that hasn’t happened and we can no
longer afford to carry the extra costs.We are currently
making just 1 cent a litre profit for every litre we sell
and in the commercial part of our business, we are losing
money. No company can expect to survive under those sorts of
pressures without passing on some of the extra costs.”

Mr
Griffiths said he is very aware that lifting prices is
unpopular and affects people’s lives. “All I can do is
repeat our promise that we will swiftly pass on lower prices
to motorists once we start paying less for
fuel.”

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